Prepping your business for investment
(Part 12 of a 24-part weekly series)
WHILE currently “Zimbabwe is open for business”, it will be in business post the 30 July plebiscite. No matter what the outcome is, economic activity is expected to rise and it is up to you to prepare your business for the upsurge. Most of the local enterprises will require investment in terms of equipment, technology and human capital to compete, if not survive after the upsurge.
A common misconception is that investors especially debt financiers are concerned about collateral. Any investor whether equity or debt usually focuses on a competitive business model with collateral coming as a fallback. A competitive business model is based on the following;
i. Unique value proposition - most importantly, you need to identify and define your value proposition against all other service providers. Customers pay for value and how much they pay depends on how much they value your offering. The Value Proposition Canvas by Strategyser is a useful tool to help you understand how you can structure your product offering to meet customer needs. The basic principle is for you to understand customer pains, jobs to be done and gains. It is through mastering your value proposition that you find people packed to the bream in a joint that sells $3 pints and on the other hand, there are no people at another joint that sells $1 pints all supplied by Delta Beverages.
ii. Strong internal processes and systems once you master your offering, it is critical that you design your business in a way that makes it efficient and effective. Most businesses underestimate the value of having strong systems and processes but this is key in having a competitive business model. You should make it a priority to interrogate every process to ensure its usefulness in relation to the value you want to deliver to the customer. The sole purpose is to reduce your cost to income ratio for all your service offerings which allows you to create a buffer on your margins especially if the price becomes a key determinant of demand. Mastering and controlling the costs allows some businesses to always offer their service at a discount whilst others are always struggling to cope at market prices.
iii. Scalability/Replicability - even if you have a valuable proposition and cost competitiveness it is also important to be able to appeal to a larger population. Investors have a preference for businesses that are able to replicate or scale up their business models to serve a bigger population. Take this particular scenario for instance, as talented local artists in Zimbabwe are fighting for a 13 million pie, those in Nigeria are fighting for a 186 million pie. If the Chairman Killer T targets a 5 percent market share and Davido targets the same, Davido will have more than 10x the returns compared to the Chairman Killer T.
On a practical basis, as an entrepreneur you need to develop a competitive business model and this is done through:
i. Comprehensive Strategic Plan - It is easier to reach your destination if you are clear of where you are going. The Strategic Plan allows you to map out your vision and your aspirations as a business. The Strategic Plan lays out your business priorities and broadly what you need to do to develop a competitive business model. At Genesis Global Finance we assist you with the strategic planning process that ensures that you have a Comprehensive Strategic Plan.
ii. Actionable Business Plan - In addition to the Strategic Plan, you need to develop an actionable business plan which lays out how you intend to maintain your competitive business model. The Business Plan is your playbook that guides you in what steps you need to take to maintain and improve your business model.
These two documents will be consolidated to develop an Information Memorandum that you can use to engage investors. Don’t be left out . . . lets work together so that when Zimbabwe is in business you will be in business.
Please call our offices for a structured solution to your financial problem. ◆ This article was compiled by Carlton Simbarashe Takawira a resource mobilisation consultant at GENESIS GLOBAL FINANCE. The contents herein are for information purposes only, and GGF does not accept responsibility for any loss arising from the use of materials or opinions contained in this article. TO CONTACT GENESIS GLOBAL FINANCE: Call us on: +2638644131515 or +263777352828; Like us facebook: genesis global finance/ private limited. Follow us on Twitter: @ ggfafrica. LinkedIn: /in/genesis-global-finance-166908a3/